How to engineer a cash management monster

What does it take to succeed in the increasingly competitive world of transaction services? Internal collaboration, global footprint, adaptability, connectivity and mobile technology all make up part of the equation. But every bank, and every client, is different

For the past decade and more, the big money spinner in global
banking was to be a
flow monster. Becoming a leader in the sales and trading
of fixed income, currencies and commodities was the fast
route to the big league of earnings.
FICC was the glue that held global banks together.

But with a combination of
regulation, litigation and moribund markets challenging the
flow monster model, banking industry leaders are increasingly
turning to a new adhesive – transaction
services.

At the heart of transaction
services is
cash management. And at the heart of the biggest
banks’ daily dealings with their clients, whether
corporate or financial, are now not just the wheels of daily
payments or trades, but also a strategic view of how to operate
efficiently and successfully in an ever-more international
marketplace.

Being a top cash manager is
increasingly a prerequisite of being a top global bank.
Euromoney’s annual cash management survey is
the benchmark for the industry, with well over 27,000 corporate
and financial services clients taking part.

HSBC retains top spot in
both the
financial institution and
the non-FI categories this year. It holds a resounding top
place in the non-FI category, with almost double the points of
second place Citi.

But HSBC is not alone in
keeping its position among the world’s top-ranking
cash management providers, as the leading
group remained similar to last year. With myriad banks
providing global cash management solutions there is a
consistency to the top 10 that suggests a long-term
satisfaction among their clients.

What does it take for these
banks to make it into the top 10? As each bank has grown and
evolved in its own way there is no set standard for producing
results, but themes for success in working alongside modern
corporates do emerge.

We have built a platform which has allowed us to innovate
and provide a globally consistent experience

Jennifer Boussuge, Bank of America Merrill
Lynch

When banks describe the
transaction banking business as the 'core’ or
'backbone’ of their clients’
business, what do they actually bring? This is a market that
appears to be both a marathon and a sprint: one in which
longevity and track records are crucial, but so is cutting-edge
innovation.

Bank of America Merrill
Lynch and Citi are just two banks that have created innovation
centres to work directly with clients to ensure they are
building a banking proposition that caters to
customers’ needs using their direct feedback.
Through workshops they can feed upwards what the client wants
and, where there is a commonality between several companies,
make an appropriate offering around it.

Naveed Sultan, global head
of treasury and trade solutions at Citi, says the bank has
created a diagnostic tool that runs comparative studies for
clients to compare themselves against their peer group and find
solutions to run their operations more effectively.

BAML’s co-head
of global transaction banking Dub Newman says: "We are in
regular contact with our clients, and meetings such as the
annual advisory board and other client conferences give us a
very deep understanding of what they need from us.
Increasingly, they want solutions that allow them to drive
loyalty among their own client base."

One thing the top 10 banks
have in common is understanding that they need to pull
together, both within the transaction banking department and
across different divisions.

There is no consensus over
what falls within transaction banking – some will
stick to traditional trade finance while others will bring
their card offering into the fold – but there is a
rising understanding about the possible benefits of figuring
out which divisions can work together to create the most
cohesive structure for clients.

Diane Reyes, global head of
payments cash management at HSBC, says the bank has focused on
creating a strong digital strategy to support its clients. This
includes breaking down previous roles for the creation of
specific product heads, such as e-commerce, to support growing
digital requests and the diversity of the support that is now
needed by the corporate clients.

Depending on size and
global reach, the banks will break down their operations into
manageable chunks – BAML has regional heads including
Newman and Jennifer Boussuge to run global transaction banking
north America and EMEA respectively – to oversee
geographical regions. And Boussuge notes that an outcome of
dividing up the operations in this way is that, rather than
there being competition between the regions as they vie for
attention, collaboration is encouraged.

Working across the business
and the bank in a joined up way makes sense to provide a
coherent structure to customers. The different parts of the
bank will often work with the same clients, and working in a
cohesive way creates strong brand loyalty when they all work
well together.

This moving away from
working in silos within banks has benefits as it creates a
streamlined operation, which ultimately help the client. Angelo
Rizzuti, UniCredit’s deputy head of global
transaction banking, explains that within the GTB division
there is closeness, not only to the sales side, but also to the
product management and the product development teams, to
structure the most effective offering for the client base.

Further reading on Euromoney

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